China is the Last Frontier for Coffee

The growth of specialty cafés and coffee houses has driven consumption since 1997 when Nestle, followed shortly after by Starbucks, first began investing in developing China's domestic market. Within five years China hosted its very first barista competition. Today there are 3,000 Starbucks locations with 600 in Shanghai alone ― a sure sign of positive growth for the masses.

The newly opened Starbucks Reserve Roastery in Shanghai is a testament to the growth anticipated. Starbucks is opening a new store a day in China. Good news? Of course. People often get their first favorable impression of special coffee at chain locations. Tasting a double tall latte for the first time is more than memorable and, as their curiosity and confidence builds, they soon venture to other cafés. These may be as small as a postage stamp but big on coffee quality.

Demand for specialty coffee is what leads small-batch roasters to feature a farm identified, SOE (single origin espresso) in shops where baristas describe the nuances of flavor while brewing pour overs. Interestingly, many Chinese cafés now offer a Yunnan coffee in their lineup. In the past, cafés which prescribe to specialty coffee and brewing methods, feature Ethiopian natural or a Geisha from Panama on the menu. Coffee grown in Yunnan has joined the ranks. Shanghai, Beijing, even the smallest cities of 9 million offer a variety of coffees to brew.

China presents a unique opportunity. It is a nation that both grows and drinks coffee. The consuming population is beginning to appreciate specialty coffees at a time when local roasters are discovering how to grow and process coffee of the finest quality. Imagine if only 2% of China’s 1.4 billion population, aged 16 to 59 years, began to enjoy specialty coffee. That would add 20 million coffee drinkers. Can the globe’s coffee producers supply enough? Coffee consumption is growing faster in Asia-Pacific than any region – more than double the growth rate in Europe and the United States.

China must produce quality. Will it be marketed as Yunnan or simply China coffee? Branding is huge. Could the market be better-served rebranding as “Yunnan” for a fresh start? Ponderings. Can China produce high quality consistently? The proof is in the cup.

One group instrumental in supporting China’s coffee farmers is the Coffee Quality Institute (CQI) under the tutelage of Ted Lingle, former executive director of the Specialty Coffee Association of America (now SCA) and the senior advisor to the Yunnan International Coffee Exchange, (YCE). The YCE partnered with CQI to offer resources for coffee farmers that include instruction in proper harvesting techniques, drying style, cupping education, and marketing. The intent is to build a better future for the coffee farmers of Yunnan and create a positive story for marketing exports. There is a yearly coffee competition and auction to motivate buyers and improve the livelihood of farmers.

“Like other parts of the coffee producing world, the coffee farmers had no idea of whether their coffee was good or bad,” says Lingle. “Competitions give them an answer and, more important, demonstrates what needs to be done to make their coffees better. The auction, like all price discovery mechanisms, provides “proof” there is a rewarding market for high-quality coffees,” he said.

Coffee is being grown on nine experimental gardens that have committed to following the advice of YCE to improve crops.

As farms upgrade their quality, will China’s roasteries, cafes and baristas improve coffee quality? Local consumption is often “left on the table” in newly developed producing markets for these reasons, 1) local markets will not pay the price which encourages farmers to export (earning more money), 2) there is little appreciation or demand for locally grown coffee among specialty drinkers who are more familiar with popular origins like Colombia, Panama or Ethiopia.

Growing a local market takes time. It took decades for the people of Brazil, the world’s largest coffee producing country, to learn to appreciate and pay for specialty grade coffee. Increasing the quality of Yunnan coffees will take time. As the market grows and matures, there will be greater “brand awareness” of China’s coffees.

Beijing-based Milan Gold Coffee Company, a China roastery that sources coffees from around the world, began to offer Yunnan coffee to their customers in 2016. Today, featured on their offerings list is an Organic Yunnan single origin. This roastery was one of the first to source within the country. It sells to high-end clients such as the Sheraton chain of hotels with “positive results,” according to regional sales manager, Steve Liu. Liu is owner, roaster, and barista of DeRon Coffee. He serves up a single origin Yunnan coffee from his bar at the Hotelex Shanghai. He also features two additional coffees from Yunnan province, a honey and a natural. All three beans are medium roasted, properly brewed and met with smiles from his customers (I was one). He also brews coffee from Panama and Ethiopia. Others working in the region for the past five to 10 years report similar results. Torch Coffee has a project called “Mountain Man” which focuses on the healthy planting, harvesting and creating a sustainable environment of the coffee farm for plants and people.

Eric Baden, the founder of Coffee Commune, has lived and worked in China since 2000. The company’s tag line is “great coffee with a purpose.” German-born, and a professional cupper, SCA member and sponsor of regional coffee events, Baden sees a very bright future for the Yunnan farmers provided they take care of the land and improve their harvest and processing techniques. He believes the local market is already learning to enjoy these coffees and that the international market will soon enjoy coffees of Yunnan as quality improves.

Are other coffee producing countries concerned?

If China begins to produce the volumes they claim to be able to achieve what will the coffee farmers in Colombia have to say? Will they lose their market share to China? Growers in Vietnam sky rocketed to the second largest coffee producers within a few years.

Provincial, ministry, and city officials in Pu’er joined the YCE in January in hosting China’s first international specialty coffee exhibition. While in theory China has the land mass and people power to “dampen the smaller countries ability to compete” in the coffee supply steam, it will be a few years before the market is sufficiently developed to challenge established countries, according to one international delegate. However, cup by cup, China’s coffees are improving as all cuppers agreed. Diversity in flavor profiles, variety, and consumer demand will prevail, according to experienced observers.

During the China Brewers Cup, a national competition for baristas, one of the finalists served a Panama Geisha. When asked if she might brew a China-grown coffee, she replied: “Maybe someday.”

Exports of specialty grade coffee are limited, with the majority going to Starbucks and to European-based coffee companies including Nestle-Nespresso. Catimor is the main varietal. How does it taste? The proof is in the cup. A few independent US roasters also see value in purchasing China coffee.

It is unclear whether their decision to import Yunnan coffee is price or quality driven. Perhaps both? Exports continue to increase as quality improves but prices at the farmgate as still low. Breaking into the top ranks of the world’s top coffee exporting nations is a long and arduous process. But if buyers pay a fair price, the farmers will be motived.

Most specialty coffee consumers express concerns about traceability, and whether farmers are paid fairly for their efforts to produce quality coffee. The Chinese in Yunnan are experienced growers in a fertile region. They are accustomed to a lifestyle well above that in most coffee producing lands. While farms are small, farmers are not impoverished. Sustainable agricultural practices are the norm. Certified organic coffees from China will be among the offerings in North America in 2018.

Consumers can be assured when enjoying a delicious cup that good coffee does good. As farmers get access to a national and international market, the gates are open for dialog. Time will tell. China could be the new silk road of discovery.

“Southeast Asia is the “last frontier” of specialty coffee,” observes Lingle. The region is his source of inspiration and “China, because of its size and wealth, will become the specialty coffee leader in Southeast Asia, as the market here, as in other parts of the world, will be consumer driven.”